Theory of Constraints - Research Paper Example

Theory of ConstraintsAbstractThis paper discusses the Theory of Constraints in relation to Homer Manufacturing Company (HMC). It explains the premise that is associated to the Theory. It further expounds on the components that constitutes it and the elements that are contained in each of the components in relation to chain of value and where they are applicable.Theory of ConstraintsThis theory is a management and improvement philosophy that was initially built up by “Eliyahu M. Goldratt and made an appearance in his book The Goal” (Ronen, 2005, 24).

This philosophy equips a scenario to a chain. Eliyahu says that, like a chain at its weakest point in any multifaceted structure at one point, it is only one aspect of the structure that restricts the given system from accomplishing its goal. Moreover, if the system needs to accomplish any noteworthy improvement then the constraint must be acknowledged and put in mind whenever the system is being managed (Dettmer, 1997).According to Ronen, 2005, Theory of Constraints philosophy is built on the premise that any organization faces at least one constraint.

A constraint can be regarded as anything that blocks a particular system from attaining its goal. Constraints can show up in many ways, though a core code within the theory is that there is mostly one, which affects the given system. The two types of constraints are internal and external. Internal constraints exist when the produce is less that the market demands. On the other hand, external constraints occur when the market demand is below the systems produce (Bragg, 2007). The Theory of Constraints is made up of split, but related processes, which have dependable concepts.

One distinct component is performance measures and five focusing steps. Basically, there are three key performance measurements to estimate, they include operating expense, throughput and inventory whereby the TOC insists on using them since they serve globally as compared to the local measures (Dettmer, 1997). Throughput denotes the speed at, which the system can generate money through sales and not production. In essence, no goods can be said to be assets until they are sold. Inventory is money that has been invested in goods that any firm intends to sell or any material that could be renewed into salable items.

Essentially, the concepts of value added and overhead are of less importance in this case. Operating expense consists of all the money firms spend in changing inventory into throughput (Bragg, 2007).The main objective in this particular event is that the firm wants to increase the throughput while at the same time decreasing the inventory and operating expense. This ensures that there is increased profit, investment returns and a flow in cash in the present and the future. Anything that bars a firm from achieving such a goal is known as constraint.

In addition, there are five focusing steps that are tools used to help systems in dealing with constraints. They ensure that the improvement effort remain on tracks as pertaining to system level improvements (Dettmer, 1997). The focusing steps are; identify the constraints in the system, taking a decision on how to utilize the system, surbordinating everything on the decision that the system is being exploited in, uplifting the system constraints and ensuring that incase the constraint is broken, and the system can restart the focusing steps all over again.

The other component of the Theory is logistical thinking. This component is used together with the five focusing steps. It assists with working through the change process by ensuring that they have identified in regard to what to change, what to change to, and how to effect the change (Ronen, 2005). The process consists of logical tools that are used to identify problems, develop them and implement solutions. The logical tools consist of effect –cause –effect (ECE) diagramming and its components like the negative branch reservations, the current reality tree, the prerequisite tree, the transition tree, and the evaporation cloud.

These tools allow an organization to examine and to articulate cause and effect (Bragg, 2007).Pertaining to Homer Manufacturing Company (HMC) it is evident that the CEO and the lean sensei consultant need to come up with a way in which they can improve the quality and delivery of the assemblies with a reduced cost. This can only be done through identifying the constraints which pull the company down. First, the reduction of labor cost will ensure that there is reduced cost as well as avoiding the excess flooding of products in the market.

Second, the cutting of the cycle of production will ensure that the product reaches the market at the expected time of the customers without missing the deadline hence improving delivery. Third, reduction of inventory, inventory costs, expediting and obsolescence reduces general cost. Fourth, improving space utilization in the plant ensure that there is presence of space to work on the products hence improving quality. Once this is done, John and Tripp will be able to develop the lean production system plan for its molding and assembly operations in order to improve the company’s performance and future operations with regard to the Theory of Constraints.

References:Bragg, M.S. (2007). Throughput accounting: A Guide to Constraint Management. Hoboken, N.J: John Wiley & Sons.Dettmer, M.H. (1997). Goldratt's Theory of Constraints: A Systems Approach to Continuous Improvement. Milwaukee, Wis.: ASQC Quality Press.Ronen, B. (2005). The Theory of Constraints: Practice and Research. Amsterdam: IOS.